Rail Profiteering Fact File

The rail profiteering fact file FACT: According to their latest filed accounts, in one year the train operating companies have paid out at least £82.5 million in dividends to their owning groups. If the Secretary of State has approved Great Western’s request to pay an extra £33 million, that total is £115 million.

FACT: The TOCs will be paid up to £124 million each year under the new National Rail Contracts. One third of it guaranteed, just for having a contract, and the rest judged against not-very-demanding performance targets. Avanti scored 0 for customer experience last year, but still got almost £6 million, the vast majority of their possible fee.

FACT: FirstGroup’s rail subsidiary companies paid over £30 million and possibly more than £60 million to their parent company in 2021. First Rail paid £40 million to FirstGroup plc.

FACT: FirstGroup are very happy about their National Rail Contracts and believe their shareholders will do very nicely as a result: “As the UK’s largest operator [FirstGroup] are well placed both to drive increased patronage and to generate resilient and consistent returns for shareholders as the UK passenger rail industry continues its evolution to a more customer-focused and sustainable railway system that works better for all parties.”

FACT: The train operating companies are on a multi-year risk-free jolly at public expense. Don’t take it from us, listen to what they tell their shareholders. Here’s FirstGroup: ‘the DfT retains substantially all revenue and cost risk (including for fuel and wage increases)”. And here’s Go-Ahead: “The NRC [National Rail Contract], which will run until at least April 2025 with the potential for an extension of a further three years, is a management contract with extremely limited exposure to changes in passenger demand and no substantial cost risk to GTR”. These are not heroic disruptive venture capitalists but parasitic organisms enriching themselves while managing decline on our railways.

FACT: You have to be *very* bad to lose a franchise. Avanti have just got a 6-month contract extension worth up to £6 million in profits, in return for running the worst service in Britain. LSER were only stripped of a franchise when it came to light that they had been hiding public money. And even then, their owning group was rewarded with a National Contract on Thameslink, Southern and Great Northern which will pay them up to £31.7 million in profits each year.

FACT: Three rolling stock companies who lease trains to the train operators have paid out dividends of £152 million this year, much of it channelled abroad through tax havens. This is important because they are profiting off exorbitant lease charges, which have increased 115% in the last 5 years and which are all charged to the taxpayer. They are feeding off public subsidies and enriching themselves at our expense.

But the government is shielding their self-enrichment while they and the industry focus on ‘staff costs’.

FACT: This profiteering is all enabled and guaranteed by the Department for Transport. The DfT designs and awards the contracts, pays the train operating companies, picks up the tab for the rolling stock companies and then acts as muscle in their attempts to drive down staff costs by cutting jobs, holding down pay and closing ticket offices. The DfT is protecting the profiteers while they enrich themselves at public expense.